MAS not ruling out further fund-raising

MALAYSIA Airlines (MAS) (3786)has not ruled out further fund-raising exercise in the future and may consider consolidation if the need arises.

"We are not planning (to raise funds) at this point (in time), but consolidation is something that we would not rule out," its managing director Tengku Azmil Zahruddin told reporters after the airline's extraordinary general meeting in Petaling Jaya, Selangor, yesterday.

The national carrier received shareholders' approval on its proposal to raise RM2.67 billion via a rights issue yesterday.

It plans to use the proceeds to buy six Airbus A380 superjumbos and bundle four Boeing aircraft from Penerbangan Malaysia Bhd for RM3.19 billion.
The rights issue and aircraft acquisition are expected to be completed by the first quarter of this year.

Tengku Azmil said the proposed rights issue is enough to fund MAS' immediate aircraft financing needs, but it may consider other fund-raising activities for business transactions in the future.

"Based on our projection of all aircraft ordered, we do not need another rights issue either this year or next year. We will cover that purchase with this (RM2.67 billion) rights issue," he said.

"But we can't tell (for sure) ... the (airline) industry is very dynamic. Maybe there will be some other transactions that may require us to go back to shareholders. So, we cannot rule out further fund-raising exercise for other purposes," he added.

The rights shares will be offered to shareholders on the basis of one rights share for every one share at a date to be announced later.

At RM1.60 each, the rights shares are priced at a 32.1 per cent discount to the theoretical ex-rights price of about RM2.36 based on a five-day volume weighted average market price up to and including December 21, 2009.

MAS chairman Tan Sri Dr Munir Majid said the rights issue would give MAS a strong and sustained platform for growth as it transforms from a 100 per cent leased fleet to owning at least a third of its aircraft.

Late last year MAS signed with European plane maker Airbus for an order of 15 A330-300s with options for another 10. This is on top of its incoming six A380s and 35 B737-800s.

MAS' new fleet will make up of 55 B737-800, 25 A330-300 and six A380s.

It expects to start receiving the new aircraft this year with the delivery of three B737-800s this October, followed by the A330-300s early next year and the A380s in August 2011. MAS anticipates all orders to be in by 2016.

Tengku Azmil said the new wide body aircraft are part of MAS' strategy to further tap the key growth areas in Asia Pacific, namely Malaysia, Asean, India, the Middle East, Australia and Japan.